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Markets Watch, Warily, for a Small Bump in Inflation

5/12/2014 9:16AM

The next small steps up in inflation could set off big tremors in financial markets. The consumer-price index and the personal consumption expenditures price index are hovering near the lowest levels ever seen outside of recessions. Josh Zumbrun reports. Photo: Getty.

This transcript has been automatically generated and may not be 100% accurate.

... the ... Weitz not domestically ... inflation is set to rise one at the US financial markets could twist into a top night of ... the Mr. still slumbering joins us now to walk us through this show thank you Brian much for being map ... they can ... so take us through this the the idea of a lot of investors is on inflation inflation as defined as a general rise in the price level ... it's particularly tricky to measure though and that's all ... part of the least part of what ... you've been writing about is ... the different measures all this ... that's right I mean ... normally if inflation was going to rise by two tenths of a percentage point to be the start a story that people want to pay all that much attention to it ... it's especially important now and the reason for that really goes back to the Federal Reserve ... the Fed set out to kind of key goals for its policies ... the one was to get unemployment down ... but to six point three percent now I mean there's a lot of other weakness in the labor market ... but the fact is that the Fed made a lot of progress on them whenever a call ... it's the inflation side with a hat made much progress yet inflation has been has been a little lower than the two percent target ... and so suddenly in a move up in inflation that could start closing the gap between inflation they're targeting people can really factory at that ... now anyone who's the grocery this um I'm still left a lot of the synthetic sledding may have seen the prices of things like melted and stay and they are ... probably the last of those most important and telling opera and I'm thinking oh my goodness I'm a bit sore derives this Mama Reitman is sportier ride ... but that the Fed doesn't consider that to be a big deal my what does the Fed thousands ... well with this this this is when it faces already starting to rise and the inflation index ... the Fed intends to focus on ... that that the Fed cares about both may look back and they look at both but they focus on majors that exclude from the UG ... and really the reason for that assisted fleeing keypad prices ... bounce around a lot so you don't mind survey friends and have gone up in price but this year but the chances out of the lowdown lot next year the Fed tries to look for that fluctuations in and look at the underlying trends ... I'm badly in a scene for the seems to me and I think the mean you saying inflation and housing is singing and ... I to sing it may be stuck for turning in the healthcare ... sector and so it's so it's it's it's the it's all over the place that they could be starting to turn ... and to tell us what what will happen in financial markets if we can a spike in inflation that's bigger than expected though I minority thing that will ease my inflation the one I see ... the things I buy is already quite high ... what what happens in financial markets and did do we see people sell bonds to weepy see people say hey these these high tech ... go go stocks in the tech sector ... of you know I'm all the things the binding onto them like a money ... well when we when the Fed previously talked about ending its stimulus programs we we saw the biggest reaction ... in bonds where people kind of wanted out of them finally I we saw that last summer when Breaking started talking about whether or not they should start the tapering process soon some people in markets of thought and if inflation sets to take up the expect the Fed the kind of pullback faster than than people are currently expecting ... but you know when the Fed's previous and the stimulus and it did the stock market to tumble to mean the general of the general financial markets and ... did a fairly broad tumble without that Fed support in place ... now the question is whether the underlying economy can be strong enough that to offset that that's that's certainly what you know ... that what what what what how come we shall say but maybe sometime yards ahead ... thank you Brian much Joe for the summer ... thanks